Atlassian stock surges 28% as cloud and data center revenue beat estimates

Atlassian shares climbed more than 28% on Friday after the company delivered fiscal third-quarter results that easily topped analyst projections, driven by strong cloud subscription growth and a surprise jump in data center revenue.

The company reported adjusted earnings of $1.75 per share on revenue of $1.79 billion, well ahead of the $1.32 EPS and $1.69 billion in revenue that analysts had expected. Cloud revenue rose 29% year over year to $1.13 billion, beating the $1.08 billion consensus, while data center revenue hit $561 million—far above the $515 million forecast.

The strong quarter marks a turnaround for Atlassian, whose stock had lost more than 45% of its value this year amid a broad sell-off in software stocks. That downturn—sometimes called the “SaaS-pocalypse”—was triggered by fears that AI-powered tools from companies like OpenAI and Anthropic would erode demand for traditional software. But CEO Mike Cannon-Brookes pushed back on that narrative in an interview Thursday, noting that customer expansion remains robust. “Those fears are certainly not playing out in Atlassian’s numbers,” he said.

The company also raised its full-year guidance for both cloud and data center revenue growth, now expecting 26.5% and 21.5%, respectively. BTIG analysts highlighted the Teamwork Collection bundle—which offers AI credits—as a key growth driver, giving the stock a buy rating. They wrote that Atlassian is turning the AI disruption risk into a competitive advantage by leveraging its Teamwork Graph data.

Atlassian cut about 10% of its workforce in March, a move Cannon-Brookes said would free up capital to invest in AI and enterprise sales. The bet appears to be paying off.

Source: CNBC